On May 19, 1937, a light came on at a farm in rural Crawford County. With power flowing from the newly formed Northwestern Rural Electric Cooperative (REC) in Cambridge Springs, electricity was no longer a convenience exclusively for the Commonwealth’s more populated areas.

At the time, Pennsylvania farmers were starting to bring electricity to their communities by forming cooperatives, with Northwestern REC — the first of 14 cooperatives in Pennsylvania and New Jersey — laying the groundwork.

But it was no easy feat.

Cooperative leaders were keenly aware that electrifying the rugged rural regions of the Commonwealth would be a costly endeavor — it’s why investor-owned utilities (IOUs), focused on turning a profit for shareholders, wouldn’t extend their lines beyond urban population centers in the first place.

“But anything is possible if enough people say, ‘We’re going to do this,’ ” says Lowell Friedline, who retired this year after 51 years of service on the Somerset REC Board of Directors. “That’s what a cooperative is all about. It’s the ability of a group of people to do what an individual can’t dream of doing. That word is important: We should be dreamers who can dream of what we can do.”

SUITS AND BOOTS: Allegheny Electric Cooperative, Inc. staff and board members show up, ready to work, for members wherever they’re needed — sometimes in boots and overalls, and other times in suits and ties. ABOVE — Michael Kovachik, a power delivery engineer, examines transmission lines for potential reliability upgrades.
BELOW — Board Chairman Jim Stauffer, left, who also chairs the Valley Rural Electric Cooperative (REC) Board of Directors, meets with Lowell Friedline, former Allegheny board chairman and recently retired member of the Somerset REC board, at the Pennsylvania Rural Electric Association’s Legislative Event. During the annual event, cooperative leaders meet with state policymakers to advocate for rural communities.

 

'We are those people'

While rate affordability is making headlines and becoming a fixture in policymaker talking points, the question of how to procure energy at the lowest cost possible has always been vital to rural electrification.

In the early days, each cooperative purchased its power from IOUs. By 1944, however, rural electric cooperatives in Pennsylvania were paying more than anyone else in the nation for wholesale power. Recognizing the strength of collaboration that helped to illuminate their lives, those cooperatives came together and formed their own generation-and-transmission (G&T) cooperative — Allegheny Electric Cooperative, Inc. (Allegheny) — to secure affordable sources of energy.

“It can be easy to forget when you look back at these old photos and see men in suits that these were farmers, blue-collar workers, banding together to make something happen that the big companies said couldn’t be done,” notes Jim Stauffer, chairman of both the Allegheny and Valley REC boards. “They knew the people whose homes were depending on this electricity. Today, we still know those people because we are those people.”

Recalled in the book, “Miracle Blessing,” which details the earliest days of rural electrification in the Commonwealth, the first step toward Allegheny’s creation was taken March 17, 1944, at a board meeting of the Pennsylvania Rural Electric Association (PREA). Formed two years earlier, in 1942, PREA represents the same cooperatives as Allegheny and serves as their unified voice and advocate. Both organizations are based in Harrisburg.

Officially formed July 24, 1946, Allegheny began securing short-term power purchase agreements to supply wholesale energy to distribution cooperatives like Northwestern REC and Somerset REC. In little more than a year, Allegheny reduced power supply costs for cooperatives by more than 20%, and the average kilowatt-hour (kWh) rate for consumer-members dropped from 6.07 cents/kWh in 1941 to 2.36 cents/kWh in 1965.

“I think the cooperative way of doing business is such a breath of fresh air in today’s world,” says Brooks Shoemaker, general manager & CEO for Bedford REC. “It’s so refreshing to work at a co-op; it isn’t beholden to investors. The recipe is tried-and-true: fiscal conservatism and good old-fashioned common sense — but we’re able to make the right choice every time, and that’s due 100% to our cooperative nature.”

In its first two decades, Allegheny only had a few part-time employees, and cooperative directors and managers would routinely travel across the state to address issues, drive home that night, and drive all the way back to wrap up unfinished business. Without a centralized headquarters, directors conducted business all over the Commonwealth, including Altoona, Carlisle, Clearfield, Danville, Edinboro, Harrisburg and Sharpsville, to name a few.

“The early pioneers of cooperatives set a tone for Allegheny that continues to this day,” PREA/Allegheny President & CEO Steve Brame says. “Cooperatives show up for their members day and night, near or far, because they’re rooted in the places they serve. The results they produce — safe, reliable, affordable electricity and community-focused initiatives — are for their neighbors.”

'The best thing since sliced bread'

After 20 years, Allegheny reached a game-changing milestone, commemorated in the first issue of Penn Lines: For the first time, member cooperatives had secured a long-term power purchase agreement. Through it, energy would flow from the New York Power Authority (NYPA) and its hydroelectric plants along the Niagara and St. Lawrence rivers in upstate New York to Pennsylvania and New Jersey cooperatives.

“Looking back, we relied heavily on NYPA power,” recalls Friedline, who was also a longtime Allegheny board member, serving as chairman from 2005 to 2009. “Niagara helped to keep rates down. … Hydropower, once you take care of your investment, is pretty cheap.”

After that accomplishment, Allegheny engaged in a wave of initiatives to bring new generation assets into its portfolio while improving its own system efficiency. In 1977, Allegheny became a part owner of the Susquehanna Steam Electric Station (SSES), a two-unit nuclear plant being constructed in Luzerne County. Coincidentally, Allegheny established its current headquarters — the Locust Court Building in Harrisburg — that same year.
Becoming a part owner of a nuclear plant came with some growing pains.

“It looked pretty risky,” Friedline recalls, noting the board knew finances would be tight for years after sealing the deal. In fact, when SSES began generating electricity from its first reactor in 1983, and then its second reactor in 1985, rates increased to begin recovering the costs of construction.

The alternative, however, was no better. In 1982, rates from the private power companies selling to Allegheny rose anywhere from 20% to 90%, according to “Miracle Blessing.” Allegheny estimated its part ownership of the plant would reduce future power costs by $92 million over 17 years.

“We saw when our investment would cross the line and be less expensive than the IOUs,” Friedline says. “It took a while, but we got past the line, and it was the best thing since sliced bread.”

An investment pays off

To this day, Allegheny maintains a 10% share of SSES, which has historically produced approximately 60% of cooperative energy needs year over year.

“The SSES nuclear plant was an investment that continues to pay dividends,” says Todd Sallade, PREA/Allegheny vice president — power supply & engineering. “Allegheny saw rates remain steady — even drop — for years and years because of the power being produced at our nuclear plant.”

The combination of NYPA and SSES, however, didn’t completely cover cooperative energy needs, requiring Allegheny to continue to buy what it couldn’t generate on its own. To minimize the cost of its power purchases, Allegheny celebrated its 40-year mark in 1986 with the launch of the Coordinated Load Management System (CLMS), an innovative demand-response program done in partnership with cooperative consumer-members.

“The idea is that the cheapest kilowatt-hour is the one you never have to purchase,” explains Brian Smith, PREA/Allegheny CLMS manager. “By volunteering to let us turn off certain appliances in their homes when energy demand peaks, cooperative consumer-members save themselves and their neighbors money. The idea worked so well that other utilities modeled their own demand-response programs after CLMS.”

Later that year, Allegheny began construction of the Raystown Hydroelectric Plant (Raystown) in Huntingdon County. Today, Allegheny continues to operate the plant, which began generating electricity in 1988, in partnership with the U.S. Army Corps of Engineers. Compared to similar plants, Raystown operates at the top of its game, available to produce power nearly 24/7 thanks to decades of meticulous care.

“All the small things that we do from day-to-day — whether it’s replacing air compressors or doing our annual inspections — prevent service interruptions,” explains Clay Harshbarger, superintendent of Raystown operations. “When you’re familiar with the plant, you get a sense of how it’s running. We sweat the small things here so they don’t affect the greater mission.”

And as demand across the grid has risen, Allegheny has continued its tradition of innovative solutions. In 2018, the G&T cooperative had a bright idea to conserve energy without disrupting consumer-members by replacing their incandescent lightbulbs with LED lightbulbs. This created a reduction in load equal to building a plant half the size of Raystown at a fraction of the cost.

“The idea was that the energy-efficient LED lightbulbs would reduce the amount of energy needed by the local distribution cooperatives,” Sallade says. “When cooperatives reduce their power needs due to consumer efficiencies, this reduces Allegheny’s need to purchase more expensive energy from the market. This brings down the costs for local distribution cooperatives and, ultimately, saves the consumer-member money.”

With energy policy at the forefront of the industry’s ongoing challenges, Allegheny works with PREA to develop strategic approaches to power supply and energy issues. In 2023, the organizations established an Energy Transition Task Force to explore new opportunities to support rural electric cooperatives. Through this group’s work, Allegheny secured a $20.5 million federal Empowering Rural America (New ERA) grant to develop an innovative power-purchasing program that is significantly expanding affordable carbon-free energy use across rural Pennsylvania and New Jersey. The grant will cover up to 25% of the project’s total cost. 

“This is making us one of the most, if not the most, carbon-free generation and transmission cooperatives in the country,” Brame says.

The next generation

For Rachel Hauser, president & co-CEO of Mansfield-based Tri-County REC, Allegheny’s story is personal. Her first exposure to the cooperative model came as a Youth Tour student in 2004.

“We’ve come a really long way,” says Hauser, who represented Wysox-based Claverack REC on Youth Tour. “Over the years, smart investment decisions and carefully maintaining our system have made Allegheny one of the lowest-cost providers of wholesale energy in the state.

“Purchased power costs have risen everywhere,” she adds, “but it’s been much less significant for an Allegheny cooperative. That’s the result of prioritizing affordability and long-term thinking.”

As markets continue to roil from global unrest and unprecedented demand, affordability remains at the forefront of every energy conversation. While the circumstances have changed, this is the very mission for which Allegheny was created.

“Allegheny was formed to address a problem, and it was very successful in doing that,” Hauser says. “If we stay member-driven, we can keep showing that value to the next generation.”

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